General Electric Company (NYSE:GE) Faces Uncertain Future with New CEO
The appointment of John Flannery as the new CEO of General Electric Company (NYSE:GE) renewed investor confidence in the company. However, the company’s stock is not performing well and is down 15% since the beginning of the year despite the fact that the S&P 500 is up 9.9% this year.
Flannery will have his hands full as investors look to him to turn around the fortunes of the major industrial company once he assumes office on August 1. The company had announced a profit target of $2 per share in 2018, but many analysts expect this to be lowered given the company’s current performance.
The company is currently facing cash flow problems from the first quarter where it reported negative cash flow of $1.6 billion from its industrial activities. The new CEO is expected to implement turnaround strategies that will see the company institute cost-cutting measures across all its operations.
The company’s conglomerate structure has also been brought into question with some analysts pointing out that it might be contributing to the company’s declining revenues. In response to this, GE worked with Trian Fund Management earlier this year to examine ways that the company could reduce its operating costs.
GE’s cash flow issues stem from its dividend payments as the company spends about $8 billion annually on dividends paid to shareholders. Mr. Flannery assured investors that their dividends would not be reduced and that he would examine the corporation’s entire portfolio to determine areas that need improvement.
John Flannery is currently the head of GE’s health care business, which he has run successfully. Investors’ hopes for GE’s future performance lie squarely on Mr. Flannery’s shoulders.
The question is, will he turnaround the industrial giant’s fortunes by the end of the year? In addition, is GE a good investment now?
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